Buy Aurobindo Pharma; target of Rs 940: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Aurobindo Pharma

Aurobindo Pharma (ARBP) would acquire seven marketed oncology products, intellectual property and commercial infrastructure from Spectrum Pharma for a consideration of USD300m, which includes an upfront payment of USD160m and a milestone-linked payment of USD140m. The acquired portfolio is expected to have contributed USD105m to Spectrum in CY18, implying an attractive valuation of EV/sales of ~1.5x (EV based on upfront payment only).

Outlook

We raise our FY20/21 EPS estimate by 2%/2.7% to INR60.5/INR63.8 and revise our target price to INR940 (prior: INR920), based on 15x 12M forward earnings, to factor in this acquisition. Maintain Buy.

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